New Delhi: India will begin importing coking coal from Mongolia on a trial basis later this month, as part of its strategy to diversify the sources of this crucial steelmaking raw material and reduce its dependency on Australia, according to two sources familiar with the matter.
Steelmakers such as JSW Steel and the state-owned Steel Authority of India (SAIL) are set to receive shipments of coking coal from Mongolia after extensive negotiations, the sources, who requested anonymity due to official protocols, revealed.
India’s Ministry of Steel, JSW Steel, and SAIL have not yet responded to requests for comment from Reuters.
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JSW Steel is expected to receive approximately 30,000 metric tons of coking coal from Mongolia, while SAIL is projected to receive between 3,000 to 5,000 metric tons, the sources indicated. This will be the second shipment for JSW Steel, which previously imported 8,000 metric tons of Mongolian coking coal in 2021.
The coal supplies will be routed through Chinese ports. However, Indian authorities are exploring alternative routes to avoid over-reliance on China for a steady supply of coking coal from Mongolia, due to the tense relations between India and China. The two countries experienced their most significant military clash in decades in June 2020 at their disputed Himalayan border, resulting in the deaths of 20 Indian and at least four Chinese soldiers. Thousands of troops remain stationed on both sides of the border.
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Efforts are being made to identify alternative supply routes for Mongolian coking coal to India, though details have not been disclosed. Indian steel mills have requested government intervention to establish routes that will ensure consistent supplies of the superior-grade Mongolian coking coal.
Mongolia, rich in mineral resources, faces challenges in exporting raw materials to countries like India without a viable and dependable route. Some Indian companies are also considering acquiring or leasing coal and copper assets in Mongolia.
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Indian steel companies consume around 70 million metric tons of coking coal annually, with imports accounting for approximately 85% of the country’s total requirements. As the world’s second-largest crude steel producer, India has struggled with the volatility of coking coal supplies from Australia, which typically provides more than half of India’s annual imports.
Recently, Indian steelmakers have increased coking coal imports from Russia to benefit from lower prices caused by Western sanctions on Moscow due to the war in Ukraine. In the first half of 2024, Russia became India’s third-largest supplier of coking coal, exporting 3.3 million metric tons, according to data from commodities consultancy BigMint.
